Perils

A large hailstorm and heavy rain resulted in substantial interior damage to a commercial building. Apparently hail stones clogged up the drains, causing the water to back up into the interior of the building, rather than the storm breaching the structure and allowing water to enter. Is this covered because “hail” was the proximate cause of loss under the Special Causes of Loss form?

The Special Causes of Loss form (and most crime forms) excludes losses 'where the only evidence of the loss or damage is a shortage disclosed on taking inventory.' In other words, if you conduct an inventory and find something missing, that doesn't necessarily mean it was stolen. But what DOES it mean? In this article, we'll discuss how this exclusion should be applied and what the courts have said about it.